(Bloomberg) -- The U.S. Internal Revenue Service will waive some penalties for taxpayers who owe taxes because of Obamacare.
The changes, announced Monday in Washington, apply only to people who received subsidized health insurance during 2014. On tax returns, they must reconcile eligibility for the credit with their actual income and pay back some of the subsidy if they received too much.
The changes, announced Monday in Washington, apply only to people who received subsidized health insurance during 2014. On tax returns, they must reconcile eligibility for the credit with their actual income and pay back some of the subsidy if they received too much.
That can happen if someone got a higher-paying job or a raise during 2014 and didn’t ask the government to alter the subsidy.
The IRS will waive penalties for making that payment late or for failing to pay estimated taxes throughout 2014.
Taxpayers must send in a letter for a penalty waiver. They still must pay the taxes within a year and will owe interest after April 15, the due date for individual tax returns.
About 8 million people purchased health-care policies through the insurance exchanges in 2014. About 85 percent of those who initially enrolled received subsidies, which went directly to insurance companies during 2014.
The penalties don’t apply to people who must make payments for failing to comply with the individual requirement to purchase health insurance.
Article Source Bloomberg
Here is a reminder for everyone who is getting a subsidy through Covered California of how important it is to report income changes. Most people do not associate 'health insurance' with 'IRS tax penalties', but now the two ideas are linked.
Covered California has suggested a guideline of reporting changes to income of 10% or more on a monthly basis. I know this is difficult for self employed folks and could result in dramatic swings in medical benefits. Despite this Cov CA suggestion, subsidies and income are still reconciled on an annual basis.
As always, consult your favorite tax adviser for tax questions but don't hesitate to contact John Caris at 707-935-6294 x103 for insurance questions.
The IRS will waive penalties for making that payment late or for failing to pay estimated taxes throughout 2014.
Taxpayers must send in a letter for a penalty waiver. They still must pay the taxes within a year and will owe interest after April 15, the due date for individual tax returns.
About 8 million people purchased health-care policies through the insurance exchanges in 2014. About 85 percent of those who initially enrolled received subsidies, which went directly to insurance companies during 2014.
The penalties don’t apply to people who must make payments for failing to comply with the individual requirement to purchase health insurance.
Article Source Bloomberg
Here is a reminder for everyone who is getting a subsidy through Covered California of how important it is to report income changes. Most people do not associate 'health insurance' with 'IRS tax penalties', but now the two ideas are linked.
Covered California has suggested a guideline of reporting changes to income of 10% or more on a monthly basis. I know this is difficult for self employed folks and could result in dramatic swings in medical benefits. Despite this Cov CA suggestion, subsidies and income are still reconciled on an annual basis.
As always, consult your favorite tax adviser for tax questions but don't hesitate to contact John Caris at 707-935-6294 x103 for insurance questions.
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